Tag: gse

I have been writing about housings downturn for sometime and housing has been trending downward for the last 57 months straight. Even with all the government support, various moratoriums, delays, refinances, loan reworks and a plethora of other gadgetry the trend still remains.

Now I am ready to call a crash. But before I get to that specific information lets look at some recent data.

According to Bloomberg today, US homeowners in the foreclosure process were an average of 507 days late on payments in 2010 compared to last years record of 406 days late in 2009 (a 25% increase).

According to Realty Trac a record 2.87 million properties received a notice of default last year, despite a 30 month low in December caused by the robo-signing scandal, and that number is expected to climb this year.

A record 1 million homes were foreclosed upon and nearly 7 million mortgages are at least 30 days in arrears, but FNM expects home prices to rise in 2011.

Foreclosures have weighed down U.S. housing prices as the nation’s unemployment rate is stuck at more than 9 percent. Home values may rise 0.6 percent for the year, the first annual jump since 2006, according to Fannie Mae, the largest U.S. mortgage buyer.

Let me take you back to Christmas Eve, 2009. It was a time to wrap gifts for loved-ones. That’s how the Obama Administration felt about the financial industry when it lifted all caps in emergency bailout money to Fannie Mae and Freddie Mac. That means the taxpayer was on the hook for all losses at these two mortgage giants no matter how big the losses are.

The move caused a slight stir, but never got the attention of the American public because the announcement was timed to coincide with the peak season of distraction. And so it was forgotten…but not by Fannie and Freddie.

When you know you are about to do something unpopular you try to hide it. For instance, the public would never know that over 140 banks (not counting credit unions) have gone under this year because their announced failures only happen on Friday evenings.

Another extremely unpopular event would be another round of bailouts for Wall Street banks. That’s why the provisions are hidden deep within the financial reform bill.

For all its heft, the bill doesn’t once mention the words “too-big-to-fail,” the main issue confronting the financial system.

Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts” talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule.

Believe it or not, this is not the most outrageous thing Washington has done in the last week.

After posting massive losses, yet again, Fannie and Freddie have warned that they will be needing another round of bailouts in the near future.

Fannie Mae and Freddie Mac, already reeling in red ink, are warning they could face additional losses from the weakening condition of mortgage-insurance companies.

Fannie and Freddie together have required capital injections from the Treasury of $112 billion since the government took them over through conservatorship last year. Their need for government support would have been greater without collecting on claims from mortgage-insurance companies. Fannie and Freddie have received payouts of $2.3 billion and $658 million, respectively, from mortgage insurers through September this year.

But as conditions for mortgage insurers deteriorate, Fannie and Freddie have warned that their claims against the insurers may not be paid in full.